May 31, 2017

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Dear Colleagues,

In my March 29 memo to campus, I outlined our approach to the reductions we must make in order to align our budget to our fiscal realities. You can learn more about these plans by reviewing the memo as well as a presentation that includes background about our campus operating budget.

Since then, the provost, vice chancellors and others have been working diligently to plan for a permanent reduction of $19 million in state budgets effective July 1. In addition, they are working to account for the first of 10 annual payments to reimburse funds spent this year that we did not receive due to the ongoing state budget impasse.

Most of their plans are in place, although some details are still being finalized.  I write to update you on our progress.

PERMANENT REDUCTIONS FOR FY18

You will recall that we are making $19 million in permanent cuts to state-funded accounts – those supported by state appropriations and tuition. The amount is based on the governor’s proposed budget for FY18 as well as conservative enrollment estimates.

To minimize the impact of reductions on current employees, our plan was to capture $10 million of that total by sweeping vacant salary lines – budget commitments to positions that are not filled – into a central pool. We anticipated that we would have more than $10 million in the pool, allowing us to strategically fund approved critical positions going forward. In fact, we identified nearly $12.5 million in vacant positions that will be centralized effective July 1.

The additional $2.5 million above the $10 million required for the reduction will allow us to cover future vacation/sick leave payouts and salary increases associated with promotion and tenure and to strategically fill vacancies or add positions based on critical need. I anticipate that initially we will be focusing most of our attention on positions necessary to ensure that our fall classes are fully staffed.

Nine million, the balance of the $19 million after the salary sweep, was to be covered by reductions in equipment, supplies and contractual services, campus work opportunities for students, travel and targeted reductions to specific units or areas. The goal was to do what was possible to minimize the impact on our academic programs and our students. As you’ll see from the chart below, the percentage of reductions per unit was not across-the-board. 

FY18 Permanent Reductions by Unit

Unit Total state budget Permanent reduction % of unit state budget

Academic Affairs

$116,718,962

$4,254,907

4%

School of Law

$9,137,878

$465,000

5%

Development and Alumni Relations

$2,666,315

$166,000

6%

Student Affairs

$2,274,099

$256,101

11%

Administration and Finance

$17,618,980

$1,990,951

11%

Research

$4,711,579

$679,234

14%

Chancellor’s Office

$5,769,624

$798,762

14%

Athletics

$1,551,833

$300,000

19%

Economic Development

$500,511

$100,102

20%

Note: Does not include sweep of vacant positions or one-time payback

I am deeply grateful for the hard work done by the vice chancellors and others across campus. These reductions are very difficult, following upon a $21 million permanent cut already made this year. But they are essential to our financial well-being.

The vice chancellors will be sharing the specifics within their own units in the days ahead. An overview follows.

Layoffs, non-renewal of contracts and vacant positions

We built much of our permanent reduction on vacant positions in order to avoid layoffs, but unfortunately, layoffs and the non-renewal of some contracts are unavoidable. Decisions affecting members of our community are deeply painful to all of us. We will do all we can to assist those employees who are affected.

Currently, we anticipate 51 civil service layoffs, although it is likely that about 100 employees will receive notification that they may be affected due to the bumping process. Those who will be affected will be notified later today. Two NTT faculty members have also received notices of layoff.

In addition, the appointments of two administrative professional staff are not being renewed, and some AP staff are being moved to term appointments.

The appointments of 24 non-tenure track faculty members will not be renewed. We anticipate that this number may grow as our academic leadership works to balance our budgetary challenges and instructional needs for fall.

We do not yet know the impact on graduate assistantships, as course needs are still being identified. Given the GA reductions already made in the current fiscal year, we did not require units to reduce the number of GAs as part of our FY18 budget cut. Even so, units have the flexibility to do so given course needs or to meet their reduction goals.

In addition, we anticipate that a number of other positions will become vacant due to retirements or resignations, and that many will not be filled. These are in addition to the approximately 158 vacant positions that account for the $10 million salary sweep reductions.

Overall, we will be a different university with the loss of these colleagues and positions, but I remain confident that we can continue to fulfill our mission on behalf of our students.

I add that we estimated that there would be a loss of about 200 student positions out of 3,700 total. While the total anticipated savings of $1 million from student wages is on target, the exact number of positions eliminated may be lower as some offices may have chosen to reduce or adjust the number of hours offered to individual students to accommodate their reductions.

Other impacts

There will be other impacts due to these reductions. While we cannot yet provide details in order to give vice chancellors the opportunity to fully inform their units, a few examples include reduced hours in the library, reduced hours at the IT help desk, and a reduced workday -- from 8 hours to 7.5 hours -- affecting the salaries of some physical plant employees. Across campus we will be leaner in general as operational budgets and student work hours are reduced. Some classes will be consolidated, although we are committed to meeting student demand for courses. Overall, we have focused on ensuring that our classes will be covered and that impacts on student services are minimal.

REIMBURSEMENT OF UNRESTRICTED FUNDS USED IN FY17

Even as we plan for FY18, we must address the issue of paying back the unrestricted funds we have spent this fiscal year to operate during the state budget impasse. As noted in my March 29 memo, we needed to identify an additional $8.3 million to $11 million in the first year of a 10-year repayment plan. The exact amount will depend, in part, on actual spending and whether the state passes a stopgap budget before the end of the fiscal year.

For the first year, the university will cover $4 million of this through central allocation of distance education and summer semester tuition as well as unrestricted plant funds budgeted for but not spent on areas like small capital projects. The balance will be assigned to units based on their actual spending of funds that would have been part of our state allocation had we received it.

In order to allow units to plan for this one-time payback at the same time they were planning for the permanent cuts, we assigned estimated numbers based on spending as of March 31. This means that any remaining FY17 spending from state budgets will be rolled into prorated future payments the remaining nine years of the plan. Below please find the list of the estimated first-year payback by unit: 

  • Academic Affairs: $1,895,380
  • Administration and Finance: $266,810
  • Athletics: $17,233
  • Campus-wide services: $249,385
  • Chancellor’s office: $76,666
  • Development and Alumni Relations: $33,765
  • Economic Development: $6,834
  • School of Law: $162,780
  • Research: $61,950
  • Student Affairs: $29,194

Units have some flexibility in how they are approaching their first-year paybacks, as the funds can come from any unrestricted account.

One further important note about our current-year FY17 budget: Those of you who review state budgets on behalf of your units may know that our budget system currently reflects the state appropriations we anticipated at the outset of the year. Since we did not receive an appropriation, we will back these funds out of budgets at the end of May. This means that nearly all state accounts will show deficits. The amount of the deficit reflects a close estimate of the total amount that must be paid back over the 10-year period.

LOOKING FORWARD

These reductions do not fully reflect other steps we must take to realign our institution for a new era. We are continuing to look at reorganization, program prioritization and other strategies to position the university for the longer term. These steps, while they could not be implemented in time to contribute to the immediate $19 million permanent reduction, must still move forward soon. Not only will they yield savings over time, but they are necessary if we are to continue to evolve as an institution and fulfill our mission. We anticipate that we will have a plan to share with the campus community and Board of Trustees in July.

THE STATE BUDGET

Two common questions we hear relate to what happens when our state legislators reach resolution on budget issues. How will our reduction plans change?

If legislators approve a stop-gap budget for FY17, our current fiscal year, it will reduce the total of the amount that will be paid back over the next 10 years. It will not affect our permanent FY18 budget reduction.

Even when legislators approve a budget for FY18, we must still move forward with the $19 million in permanent reductions. It is important to note that these reductions are already built assuming a state budget and taking into consideration our enrollment estimates.

CLOSING THOUGHTS

Many of you have shared your thoughts about our budget reductions formally through constituency groups and informally as individual community members. You have provided feedback on committee reports, given input within your units and sent me thoughtful emails. Please know that your voices have been heard. While perspectives differ and we cannot follow every request or recommendation, your feedback was important to the process.

These reductions and future steps are necessary to realign SIU for the future. The shared pain will lead to shared progress and our long-term success. I value your commitment.

Meanwhile, I appreciate all you are doing to help us prepare for the fall semester. We look forward to welcoming our students back to campus this fall.

Brad Colwell
Interim Chancellor